Which one of the following statement is incorrect about sinking fund?

A sinking fund is a savings account for a specific future expense that is known in advance.

For example, if a laptop needs replacement in 2 years and will cost $1,200, then$50 is saved every month for 24 months specifically for this laptop.

Option 1: "It is a fixed term account"

This is correct. The fund is set up for a specific time period until the expense occurs.

Option 2: "It is set-up for a particular upcoming expense"

This is correct. This is the main purpose of a sinking fund - saving for a specific planned expense like laptop replacement, car insurance premium, or vacation.

Option 3: "In this fund a fixed amount at regular intervals is deposited"

This is correct. The same amount is deposited regularly, such as weekly or monthly.

Option 4: "It can be used in any emergency"

This is incorrect. A sinking fund is for planned, specific expenses, not random emergencies.

A sinking fund is for planned expenses with a specific purpose, while an emergency fund is for unplanned, unexpected events and can be used for any emergency.

Option 4 is incorrect because a sinking fund is meant for a specific planned expense, not for any random emergency.